Justice Secretary Kenneth Clarke's proposed cuts to legal aid are not a fair or effective way to reduce unnecessary legislation and the cost of reform is "unacceptable", a report has found.

Proposals to cut the £2.2 billion-a-year legal aid budget by £350 million at an expected cost of 500,000 instances of legal assistance and 45,000 representations each year will hit the vulnerable and the poor the hardest, it said.

But Mr Clarke has said the reforms will encourage people to take advantage of the most appropriate sources of help, advice or routes to resolution - which will not always involve the expense of lawyers or courts.

The report, Unequal Before the Law?, by the Commission of Inquiry into Legal Aid, comes ahead of the Government's announcement of its plans for reform.

"There can be no semblance of equality before the law when those who cannot afford to pay a lawyer privately go unrepresented or receive a worse kind representation than those who can," the report said.

The commission's panel - former Liberal Democrat MP Evan Harris, Diana Holland, of the trade union Unite, and the Reverend Professor Nicholas Sagovsky, the former canon of Westminster Abbey - said: "Legal aid is essential to holding the state to account.

"It would be wrong in principle for the state to tolerate bad decision-making while at the same time removing the ability of ordinary people to hold those bodies to account for their mistakes by reducing legal aid.

"Cutting legal aid is a false economy. When coupled with the human cost to the vulnerable and socially excluded of reducing legal aid, the panel finds these increased economic costs are unacceptable."

The report highlighted the Ministry of Justice's own impact assessments which found that cuts to legal aid could lead to increased costs for other departments, such as health, housing and education.

According to figures supplied to the inquiry by Citizens' Advice, for every pound of legal aid spent on benefits advice, the state saves up to £8.80, and for every pound of legal aid spent on employment advice, the state saves up to £7.13.

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